The GST Council is expected to give temporary exemption from Integrated Goods & Services Tax (IGST), with some caveats, to Covid relief materials imported by India Inc, NGOs or private entities.
Officials said that the Fitment Committee of the GST Council has found merit in extending the IGST exemption to imports of specified Covid relief material by any entity, at its own cost. However, it will be subject to some conditions like — if such goods are supplied to the Central or State Government or to any not-for-profit hospital/facility involved in Covid 19 management; and the importer will submit a letter from the donee that he will be donating the said goods to them as well as submit a letter within 3 months from imports that goods have been received. Also, the exemption is expected to end on June 30, as prescribed in an earlier notification.
According to an ad hoc exemption order issued on May 3, it will be applicable only when Covid relief materials are imported free-of-cost by a State Government or any entity, relief agency or statutory body, authorised in this regard by any State Government. These items include Remdesivir injection and its API, specified diagnostic markers, medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, and Covid-19 vaccines beside some others. These have already been exempted from basic custom duty and health cess for a limited period.
Ministry FAQ
In a set of Frequently Asked Questions (FAQ), the Finance Ministry had said that a number of references have been received informing that many entities, including corporates, intend to source Covid relief material from abroad and distribute it freely, availing the IGST exemption under the said order. “It may be mentioned that in case any corporate buys it and even gives it for free, such exemption will not be available,” an answer to the FAQ said.
An official said further representations have been received from various States, Ministries beside others to extend the IGST exemption when relief materials are imported at own cost by the UN and its agencies, especially WHO, UNICEF and UNDP for free distribution to States and other agencies. The same is to be applied in case the import is done at own cost by donor organisations based in India, whether governmental, non-governmental or purely private, for free distribution or donation to government and by corporates by their Corporate Social Responsibility (CSR) funds, for free distribution either to State or any hospitals/facilities involved in Covid-19 management.
Accordingly, the matter was discussed in the Fitment Committee. “If approved, exemption for others will be available with riders for one more month, unless the Council or Government decides to extend the period,” the official said. It may be noted that two States, Gujarat and Haryana, have already started a scheme to compensate GST payout for entities, other than State approved agencies, for importing Covid relief materials on their own and giving to States.